The Fed's Big Fix: A Costly Renovation and Political Tensions
The Federal Reserve's headquarters is undergoing a major upgrade, but the project is way over budget, catching the attention of former President Donald Trump.
Cost Overruns and Criticism
The renovation of the Fed's main building and other structures in Washington, DC, has seen costs soar from $1.9 billion to $2.5 billion. This has sparked a debate about the project's necessity and the Fed's independence from political influence.
Trump's Involvement
Trump has been vocal about his dissatisfaction with Fed Chair Jerome Powell, particularly over interest rates. The renovation controversy is a new angle in their ongoing feud. The project, which began during Trump's first term, has faced several challenges, including:
- Inflation
- Changes requested by authorities
- Unexpected issues like asbestos and a high water table
Criticisms and Defenses
Critics, including Trump allies like Russell Vought, have compared the renovation costs to the Palace of Versailles. They point to features like a roof garden terrace and an executive elevator as examples of excess. However, the Fed has explained that these amenities are being taken out of context and are necessary for the building's functionality and sustainability.
Necessity of the Renovation
The renovation is essential because the Fed's main building, opened in the 1930s, had not undergone a significant overhaul until now. Powell has acknowledged his responsibility for the project, having overseen it in his previous role. He has also noted that major renovations of historic buildings are often left to successors to avoid political backlash.
Political Backlash
The controversy has gained traction, with Senator Tim Scott and others grilling Powell about the cost overruns. Vought has even suggested that Powell may have broken the law by making changes to the project without consulting the National Capital Planning Commission. Despite these allegations, it remains unclear what Trump's ultimate goal is, whether it's to pressure Powell on interest rates or to undermine the Fed's independence.